Bob Lutz has never been one to back down from a fight. The former Marine has served at a number of car companies over the decades including General Motors, BMW, Ford, and Chrysler. Most recently, Lutz served at GM's Vice Chairman for Special Advisor Design and Global Product Development.

When it comes to hardcore "car guys" in the auto industry, there aren't many as rabid as Lutz. In recent years, Lutz is responsible for spearheading the development of enthusiast-oriented vehicles like the fifth-generation Chevrolet Camaro, Pontiac G8, fourth generation Pontiac GTO, Pontiac Solstice/Saturn Sky, and the upcoming Cadillac Converj (now called the ELR).

One of Lutz's most famous "babies", however, has been the Chevrolet Volt. He has been an ardent supporter of the plug-in hybrid, so it should come as no surprise that Lutz is coming to the Volt's defense after a barrage of negative press has rained down on it.

[Source: Patrick Arena/VW Vortex]

Lutz, writing in a column for Forbes, went straight after those that have been most critical of the Volt. He rattled off six “truths” about the vehicle including the fact that the Volt was conceived before GM's federal bailout and that no Volt has caught fire on public roads during an accident. Lutz also asserted that 278,000 gasoline-engined vehicles caught fire between 2003 and 2007, but no one seemed to launch an attack campaign against those vehicles.

But Lutz saved his harshest criticism for the "right-wing media" which has gone after the Volt with many a hollow-point bullet:

But the Oscar for totally irresponsible journalism has to go to The O’Reilly Factor on Fox News, with, as its key guest, Lou Dobbs. Amid much jocular yukking, the Volt was depicted as a typical federal failure. In attempting to explain why Chevy has sold fewer than 8,000 Volts, Dobbs states, flatly, “It doesn’t work.” He elaborates, “It doesn’t go fast and go far on electricity. What happens is it catches fire."

Lutz then went on to try to clear up any confusion about who enabled the $7,500 tax credit that has been another sore point for people upset over the very existence of the Volt:

To top it off, these two media pros lamented the fact that the same government that had forced GM to produce the Volt was now extending $7,500 tax credits towards its purchase, thus squandering even more of “our taxpayer” dollars on this failed Socialist-collectivist flop. Truth? The $7,500 tax credit was enacted under the Bush administration!

Lutz’s column comes just days after GM CEO Dan Akerson testified before Congress to defend the Volt's safety record. "The Volt is safe. It's a marvelous machine. It represents so much of what is right at GM and, frankly, American ingenuity and manufacturing," said Akerson in his testimony last week. "The Volt seems, perhaps unfairly, to have become a surrogate for some to offer broader commentary on General Motors' business prospects and administration policy."

quote: GM was handed billions of dollars, damn right they can "go big"! You act like they were taking a big risk and we should give them a medal.

Why are we in the GM mess in the first place?

True, the government intervention with GM was an extreme action, which has had deep economic effects both negative and positive. Extremists will emphasize either the negative or positive and mix the gray that is this complex issue.

Historical scenarios like post-WWI Germany show the aftermath of the collapse of a nation's mega-corporations.

But if corporate collapse necessitates federal intervention, does that mean it's the best case scenario? Absolutely not.

It's kind of like if you've been getting poisoned for years and your kidneys are destroyed, it may be better to live the rest of your life on dialysis than to die. But both choices are undesirable.

The poison to the U.S. economy that has created "too big to fail" is tax favoritism.

Tax favoritism is perhaps the one single biggest factor that has created the "too big to fail" issue, although other factors like lax antitrust enforcement have also played a role.

Tax favoritism is defined by an ambiguous corporate tax system, massive and blatant federal campaign finance corruption, and a societal sentiment in which corporations feel entitled to abuse and exploit the system as far as they can.

Again, I believe that if you examine the fundamental economics of this, it gets back to the fact that privileged corporations are taxed on profits anywhere from 0-20 percent (or even a negative rate) via the combined effects of tax holidays, loopholes, etc.

At the same time SMBs are taxed at a much higher rate 30-40 percent. So they have an almost insurmountable challenge to become a competitor in a high capital industry, because there's not only the investment barrier, there's the barrier of tax favoritism.

The problem is this:As a SMB (say a Tesla-like firm without the DOE backing Tesla had) you have a Herculean task ahead of you. Let's say you've gone to Harvard Business School and can smooze with the best of them and score a cool $100M USD in venture capital. Great. But now you must compete paying a tax rate of ~35% on any profits you make, versus big guy one and two who are paying ~10%.

It's as if you're on the playground and you're the skinny computer geek and you've boldly decided to pick a fight with Bruno the burly football player. You might stand a chance, as fortune favors the bold. But all of the sudden your teacher tells you that while you can fight Bruno, you must fight with one arm and tied behind your back.

It's a fight SMBs cannot win in many cases.

And hence the corporations become too big to fail.

The issue is that no party is looking to change this as they all have their hands in the cookie jar (yes, even "Tea Party" members, in many cases). Bush did it. Obama did it.

The problem is that government is touching big business, and big business, in its perverted state likes how it feels. It wants to be government's special beloved. But it's not so subtly looking to manipulate the government to squelch competition and boost profits.

... but I digress...

On Why I think you can dislike GM's tax favoritism, but still like some of what GM is doing

GM's favoritism is one issue while the Volt is another.

You can appreciate the Volt without bemoaning the increasingly awkward situation that has evolved between GM and the U.S. gov't not overnight, but over the century (via tax favoritism fueling "too big to fail" expansion).

GM could have released a dozen sh1tty prius clones, as I said. Instead it went for a big shot. Regardless of all the federal handouts, it was still in no better shape than Ford.

But it had a bold vision with the Volt, much as Ford did with SYNC.

At the end of the day this may be somewhat correlated to its "funding", but ultimately has merits independent of the funding.

quote: I agree. Instead they did something even smarter. The Cruz and Cruz Eco. The Cruz is the REAL saving grace of GM, yet gets completely overshadowed by Volt hype. Without the Cruz, GM would be in serious trouble.

True, absolutely. The thing is very impressive.

But I think the same sentiment (high risk, high reward) that bred the Cruz bred the Volt. The Volt was just a little TOO futurist to succeed in the current market.

quote: Instead Lutz, proving he's anything but forward thinking, devotes national press time to ignore his top seller and promote more ill-will between GM and the public. Attacking the "media" and defending a car that people are NOT buying. The LAST thing he should be focusing on is the bailout and the Volt. Why remind people of GM's sorted past when he could be talking about what a hit the Cruz is!?

Well this is General Lutz we're talking about. Politically correctness and Lutz are about as foreign concepts as they come.

quote: But I think the same sentiment (high risk, high reward) that bred the Cruz bred the Volt. The Volt was just a little TOO futurist to succeed in the current market.

I think this is a great point.

GM has always been too far ahead in some tech, and if they'd have continued the tech, they'd reap a lot of rewards. Instead, the cancelled or killed a lot of products that were way ahead of their time.

GM had a lot of turbocharged engines, but the tech was immature and they canceled most things with a turbo. Even now, much of the culture has favored superchargers rather than turbos, and that's only recently.

GM was first with a EV. Imagine if they'd continued a lot of that tech instead of scrapping the idea.

GM had the best small eco-car line at the time. Cars like the Geo Metro were getting 50mpg in the 90s. Imagine GMs fortunes if they would have had the Geo line when gas prices soared.

Here's just three examples of technology and products that is taking off. GM was just too far ahead of it's time, and missed the market window.